1 1 © Oxford University Press, All rights reserved. 9 Remedies for Breach of Contract and Statutory Implied Terms

2 2 © Oxford University Press, All rights reserved. PART A Common Law Remedies 1) Discharge for breach/repudiation of contract There are two main types of breaches. One type of breach entitles the innocent party to treat the contract as terminated and is termed repudiation of the contract. This occurs where the other party to the contract breaches a condition (essential term). If a condition of the contract is breached the innocent party has an option to either accept the breach and keep the contract alive (on foot) or treat the contract as discharged. In either case the innocent party is entitled to sue for damages for the breach.

3 3 © Oxford University Press, All rights reserved. PART A Common Law Remedies cont… 2) Remedy of Damages General Rule The general rule for the award of damages is that they are compensatory. An award of damages is a sum of money paid to the innocent party who suffers a breach. Damages are compensatory in the sense that, as far as money can do it, the innocent party is to be put back in the same position as he/she would be in had the breach not occurred: Robinson v Harman

4 4 © Oxford University Press, All rights reserved. PART A Common Law Remedies cont… Rules Relating to the Award of Damages: Remoteness of Damages The rule is often stated that damages must not be too remote. In other words, for damages to be awarded the consequences or loss resulting from the party’s breach must have been reasonably foreseeable. If the loss suffered is not considered to be reasonably foreseeable then it is said that damages are too remote. It follows that only losses which are reasonable foreseeable will be recovered. Losses that are not reasonable foreseeable are considered to be too remote.

5 5 © Oxford University Press, All rights reserved. PART A Common Law Remedies cont… Rules Relating to the Award of Damages (cont): What is a reasonably foreseeable loss? Losses which arise naturally from the breach and as well as losses in the reasonable contemplation of the parties at the time the breach occurred See : Hadley v Baxendale

6 6 © Oxford University Press, All rights reserved. PART A Common Law Remedies cont… Rules Relating to the Award of Damages (cont): Causation of Damages Only losses which are caused by the breach are recoverable. Losses which are not caused by the breach are not recoverable. The courts use a but for test to determine causation. In applying the test the courts ask: But for the breach would the loss have occurred? If the answer is yes then the loss is recoverable as damages.

7 7 © Oxford University Press, All rights reserved. PART A Common Law Remedies cont… Rules Relating to the Award of Damages (cont): Duty to Mitigate Loss The law imposes a duty on the innocent party to take all reasonable steps to mitigate (lessen) his/her loss. If the innocent party fails to mitigate his/her loss then the award of damages will be reduced: Payzu v Saunders

8 8 © Oxford University Press, All rights reserved. PART A Common Law Remedies cont… 3) Measure/Types of Damages Ordinary, Nominal and Exemplary Damages Ordinary – Compensatory Nominal – Awarded but not significant Explemplary – Defendant is punished

9 9 © Oxford University Press, All rights reserved. PART A Common Law Remedies cont… 4) Penalties and Liquidated Damages Penalties are not recoverable. Liquidated Damages: Damages that are provided for in the contract.

10 © Oxford University Press, All rights reserved. PART B Statute Law Remedies: Goods Act and TPA 1) Sale of Goods Act – States & Territories

11 © Oxford University Press, All rights reserved. PART B Statute Law Remedies: Goods Act and TPA cont… 2) Trade Practices Act (TPA) Remedies for breach of implied terms under Part V of the TPA - TPA ss 75(1) & (3), 75A Remedies for breach of implied terms under the TPA S.75A of the TPA provides that where a corporation supplies goods to a consumer and there has been a breach of the implied terms then the consumer is entitled to rescind the contract and sue for damages. This can be done by serving notice to the seller or returning the goods. Breaches of implied terms under TPA treated as breach of contract. Plaintiff entitled to damages and/or rescission

12 © Oxford University Press, All rights reserved. PART B Statute Law Remedies: Goods Act and TPA cont… These Remedies are available for S.52 and S.51 AA, AB and AC Actions under the TPA: S. 80 TPA: FOR INJUNCTIONS S.87 FOR OTHER ORDERS S.82 TPA: ACTION FOR DAMAGES

13 © Oxford University Press, All rights reserved. Overview Chart